Russia: Secondary Sanctions Are Hurting Export Revenues, Oil Payments

Russian oil cargo Pure Point, carrying crude oil, is anchored at a port in Karachi, Pakistan June 13, 2023. REUTERS/Akhtar Soomro/File Photo
Russian oil cargo Pure Point, carrying crude oil, is anchored at a port in Karachi, Pakistan June 13, 2023. REUTERS/Akhtar Soomro/File Photo
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Russia: Secondary Sanctions Are Hurting Export Revenues, Oil Payments

Russian oil cargo Pure Point, carrying crude oil, is anchored at a port in Karachi, Pakistan June 13, 2023. REUTERS/Akhtar Soomro/File Photo
Russian oil cargo Pure Point, carrying crude oil, is anchored at a port in Karachi, Pakistan June 13, 2023. REUTERS/Akhtar Soomro/File Photo

Expanded sanctions on Russia and enhanced pressure on countries that Moscow considers friendly are hurting Russian firms' export revenues and creating oil payment issues, the Bank of Russia said on Friday.

The United States has hit Russia with waves of Ukraine-related sanctions and threatened secondary sanctions on foreign banks aiding transactions with Moscow. That has prompted some Chinese banks to limit dealings with Russian companies, Reuters reported.

"The widening of sanctions and pressure on friendly countries leads to companies' reduced export revenue," the central bank said in a report on financial stability in a section titled "main vulnerabilities.”

Russia distinguishes between countries that imposed sanctions over its actions in Ukraine and those that did not by calling them 'unfriendly' and 'friendly'.

"Unfriendly countries are hindering not only the sale of hydrocarbons, but also the realization of major investment projects," the bank said. "Against the backdrop of secondary sanctions, supply chains and payment mechanisms are becoming more complicated, which leads to higher import prices and supply disruptions."

The threat of secondary sanctions has also slowed Russian banks' increasing the number of correspondent accounts in friendly jurisdictions, the central bank said. Since the start of 2022, the number of correspondent accounts in US dollars and euros has dropped by 55%, it said.

US Treasury Secretary Janet Yellen on Tuesday said Washington's new authority to hit banks with secondary sanctions if they aid Russian military-related transactions had helped to frustrate, opens new tab Russia's efforts to procure goods needed for the conflict in Ukraine, but that more work was needed.



Saudi Aramco, NextDecade Sign 20-year LNG Supply Deal

At the signing ceremony, from left: NextDecade Chairman and Chief Executive Officer Matthew Schatzman, Aramco Upstream President Nasir K. Al-Naimi, and Aramco Executive Vice President of Gas Abdulkarim Al-Ghamdi. Photo: Aramco website
At the signing ceremony, from left: NextDecade Chairman and Chief Executive Officer Matthew Schatzman, Aramco Upstream President Nasir K. Al-Naimi, and Aramco Executive Vice President of Gas Abdulkarim Al-Ghamdi. Photo: Aramco website
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Saudi Aramco, NextDecade Sign 20-year LNG Supply Deal

At the signing ceremony, from left: NextDecade Chairman and Chief Executive Officer Matthew Schatzman, Aramco Upstream President Nasir K. Al-Naimi, and Aramco Executive Vice President of Gas Abdulkarim Al-Ghamdi. Photo: Aramco website
At the signing ceremony, from left: NextDecade Chairman and Chief Executive Officer Matthew Schatzman, Aramco Upstream President Nasir K. Al-Naimi, and Aramco Executive Vice President of Gas Abdulkarim Al-Ghamdi. Photo: Aramco website

Saudi Aramco and US liquefied natural gas (LNG) provider NextDecade announced on Thursday that their respective subsidiaries have executed a non-binding Heads of Agreement (HoA) for a 20-year liquefied natural gas sale and purchase agreement (LNG SPA) for offtake from Train 4 at the Rio Grande LNG Facility at the Port of Brownsville, Texas.

Under the terms of the HoA, Aramco expects to purchase 1.2 million tons per annum (MTPA) of LNG for 20 years on a free-on-board basis at a price indexed to Henry Hub. Aramco and NextDecade are currently in the process of negotiating a binding agreement, and once executed, the effectiveness of which will be subject to a positive Final Investment Decision on Train 4.

"We look forward to finalizing the terms of a long-term LNG offtake agreement with NextDecade as we explore opportunities to expand our presence in international energy markets,” said Aramco Upstream President Nasir K. Al-Naimi.

“We expect LNG to play an important role in meeting the rising demand for secure and efficient energy,” he added.

NextDecade Chairman and CEO Matt Schatzman said: “We are pleased to have reached a Heads of Agreement with Aramco for LNG from Train 4, as Aramco seeks to expand its LNG portfolio. We look forward to finalizing the LNG SPA with Aramco and to pursuing other opportunities together.”